We have previously proposed that by identifying a set of Educationally Sensitive Patient Outcomes (ESPOs), medical education outcomes research becomes more feasible and likely to provide meaningful guidance for medical education policy and practice. ESPOs are proximal outcomes that are sensitive to provider education, measurable, and linked to more distal health outcomes. Our previous model included Patient Activation and Clinical Microsystem Activation as ESPOs. In this paper, we discuss how Health Literacy, defined as "the degree to which individuals have the capacity to obtain, process, and understand basic health information and services needed to make appropriate health decisions," is another important ESPO. Between one-third and one-half of all US adults have limited health literacy skills. Providers can be trained to adopt a "universal precautions approach" to addressing patient health literacy, through the acquisition of specific skills (e.g., teachback, "chunking" information, use of plain language written materials) and by learning how to take action to improve the "health literacy environment." While there are several ways to measure health literacy, identifying which measurement tools are most sensitive to provider education is important, but challenging and complex. Further research is needed to test this model and identify additional ESPOs.